New Delhi (TIP)-Asian Development Bank (ADB) has lowered the economic growth forecast for India in the current to 7.2% from its earlier estimate of 7.5% due to the impact of Covid and the Russia-Ukraine war. The ADB also lowered the economic growth estimates for the 2021-22 fiscal to 8.7% from the earlier 8.9%. India’s GDP growth moderated to 4.1% in Q4 of the fiscal year ended March 2022 on disappointing growth in private consumption and a contraction in manufacturing, said the ADB in its supplement to the Asian Development Outlook (ADO) for 2022. “India has been hit by the omicron Covid variant and the economic impact of the war in Ukraine. Consequently, the GDP growth for 2021-22 is revised down from 8.9% to 8.7% and from 7.5% to 7.2% for 2022-23.
“Although consumer confidence continues to improve, higher-than-expected inflation will erode consumer purchasing power,” the ADB Supplement released on Thursday, July 21, said.
Some of the impacts of this may be offset by a cut in excise duties, the provision of fertiliser and gas subsidies, and the extension of a free food distribution programme, it said. Private investment will soften due to the higher cost of borrowing for firms as the RBI continues to raise policy rates to contain inflation.For the South Asian region, it has lowered the growth forecast from 7% to 6.5% for 2022 and from 7.4% to 7.1% for 2023 mainly due to the economic crisis in Sri Lanka and high inflation and associated monetary tightening in India.